Credit History & Scores
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Lenders pay more attention than ever these days to credit scores. In most cases your mid-credit score must be at least 580 to qualify for FHA or USDA loans. Conventional mortgage loans will require credit scores that are significantly higher than the government loans.
Your credit history shows your past debt obligations to other creditors and whether you paid on time or late, or if you managed your credit within limits or extended your limitations. Any derogatory late payments, such as 30 days or more, will show on this credit history. Also, any bankruptcy, repossession, or foreclosure will also be revealed on the credit report.
If you know you have made all past credit payments on time and have a good credit history, you are in good standing, and your home loan underwriter will enjoy looking at a clean report. But even if you have some "spotty" or derogatory credit issues listed above, you still may be eligible for a loan.
A mortgage loan underwriter wants to know that you are willing to repay the loan. If your credit history shows late payments or even previous bankruptcy, you can still repair your credit report with some effort.
Late payments must usually be at least a year in the past, and your current history must show that you have met your credit obligations on time and diligently for at least 12 months. If you have filed for bankruptcy, the declaration usually must be at least two years old. Since the bankruptcy, you must show that you have been diligent with credit and debt payments.
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